House Price Crash Discussion Thread

Generali

!!!!!!? wrote: »

My thought - how on earth do you have a forum about house buying, selling and renting without discussing prices?

Because the entire forum was becoming dominated by very similar threads about how house prices were about to collapse and all pleas to keep the number of new threads down were ignored or mocked.

It was getting very boring and preventing people that needed help from getting it.

Certain people wouldn't take a hint and so have been banished to the ghetto. I have a 'naughty step' at home that I do a similar thing with for my eldest (although not for discussing falling house prices).

Pobby

Yep kitchen.See where you are coming from.I guess point one,interest rates would have been around 8%.Now interestingly enough,for many years over the long term,interest rates had always been around that figure as an average.It is only of late that interest rates have become much lower reflecting the low(if you believe that) inflation economy.

Typically a £22,000 mortgage at 10% interest in the early 80`s would have been around £200 per month.So a monthly income £700 per month would hve been very comfortable.OK,same property is now £180k.Keeping to the same ratios an income of around £3,750 would be required.This is of course measured against much lower interest rates.

Regarding point two,there has probally never been a time when single occupation has been greater.

Generali

Pobby wrote: »

Yep kitchen.See where you are coming from.I guess point one,interest rates would have been around 8%.Now interestingly enough,for many years over the long term,interest rates had always been around that figure as an average.It is only of late that interest rates have become much lower reflecting the low(if you believe that) inflation economy.

Typically a £22,000 mortgage at 10% interest in the early 80`s would have been around £200 per month.So a monthly income £700 per month would hve been very comfortable.OK,same property is now £180k.Keeping to the same ratios an income of around £3,750 would be required.This is of course measured against much lower interest rates.

Regarding point two,there has probally never been a time when single occupation has been greater.

I don't disagree with you but a couple of points that run contrary to you (IYSWIM):

Interest rates long term averaged 5.01% from the BoE being started to 2006 (according to the BBC - sorry no link but it was a piece by Evan Davi(e)s).

Reletive prices have changed since the early 80s. For example, you can feed and clothe yourself for far fewer hours of pay than you could 20 years ago. If the price of houses rise but the price of food falls by enough to compensate then you're still as well or badly off as you were before, just the mix of your spending has changed.

House prices are still waaaay too high though.

WTF?_2

Pobby wrote: »

I have been thinking about affordability of property.Reading,a pretty typical south east town.!980,3 bed terrace around £20 to £25k.Affordable for someone on a reasonable salary to buy on their ownIndeed I knew many who did.At the time as I recall my income was about £10k a year which was pretty good.Tis sort of property would have peaked by 1989 to about £80k.

!996,proprties like this would have dropped to mid £40k.Again £15k a year income would have made it OK to buy as a single person.2007 would have seen similar properties from between £170k to £200k.At a multiple of 3.5 salary you are looking at around an income of £50k per annum.For the vast majority of people that is out of the question.Doesn`t take a genius to judge the outcome.Either massive wage inflation,yea right or housing to drop to an affordable level.

The only problem is, I think we'll see massive inflation. Or at least there will a determined policy that aims to produce massive inflation - whether it succeeds or not is another matter.

Given that I've been prudent and saved a bundle to use as a sizeable deposit, I'm not thrilled at the prospect of the government savaging its value through inflationary policies aimed at bailing out the mess caused by rash lending and borrowing..... :mad:

dolce_vita

!!!!!!? wrote: »

The only problem is, I think we'll see massive inflation. Or at least there will a determined policy that aims to produce massive inflation - whether it succeeds or not is another matter.

Given that I've been prudent and saved a bundle to use as a sizeable deposit, I'm not thrilled at the prospect of the government savaging its value through inflationary policies aimed at bailing out the mess caused by rash lending and borrowing..... :mad:

Then get yourself some yellow, shiny, heavy, metally stuff.

Pobby

!!!!!!? wrote: »

The only problem is, I think we'll see massive inflation. Or at least there will a determined policy that aims to produce massive inflation - whether it succeeds or not is another matter.

Given that I've been prudent and saved a bundle to use as a sizeable deposit, I'm not thrilled at the prospect of the government savaging its value through inflationary policies aimed at bailing out the mess caused by rash lending and borrowing..... :mad:

Well yes.That,of course,was the other big thing of the 70s and 80s,inflation.My first house was bought for about 10k.Mid 70s.Think our combined pre tax income was just under 3k a year.Infact,we might had invented lie-to-buy as my boss did say that very shortly my income would increase to 2.5k a year.

Well it didn`t.It increased about 2 years later to about 7k a year.Four years later it was at 10k.Well clearly it just wafted the debt away.

It would be a real U turn if the government allows inflation to get out of control but,not withstanding what happened in the 70s,I guess it would be a solution to some of the current ills.

Nenen

Was anyone else disappointed by the article in Wednesday's Independent, that I bought especially after seeing it advertised on Tuesday, titled 'Will your town beat the slump?'? I was expecting a detailed analysis of a wide range of large towns/cities across the country. Instead it just highlighted four areas of Britain as 'property hotspots for 2008'.

I'm fed up with many of my colleagues telling me repeatedly that, 'house prices will drop in most of England but of course they won't in this area (Cambridge)!' If I try and ask (politely) why they think Cambridge will be exempt they mutter and mumble about what a desirable area it is. Of course I realise that different areas will be affected to a greater or lesser degree but would love to know if this is just (misguided IMHO) wishful thinking on their part or if indeed Cambridge prices will stay strong, or even rise. I know it is not an exact science but surely there must be a way of making an 'educated' guess for particular places, isn't there? Once again... get your crystal balls out folks!

I was hoping that the Independent article would give information regarding % drop in 1989 on a city/town basis. Does anyone know if this information is available anywhere? Anyone have any info re what factors make it more/less likely for a particular town/city to do better or worse than average in any HPC?

Generali

I would expect to pay for detailed analysis like that.

FWIW, I think that generally speaking 'good' areas do better than 'bad' ones when times are hard. (eg flat prices in Chelsea fall less than those in Chiswick which again fall less than those in Camberwell)

Raveboy

i was wondering if there were any savvy house buyers out there who save up all there money until a recession kicks in and then when it does kick in prices of ex council houses and new build houses prices tumble down to rock bottom prices. When the prices have dropped dramatically then they splash their cash and buy up a great house dirt cheap. maybe even two and then sell it on at a later date for a tidy profit.

I know if I was in a postion to do so then that I was I would do. Will just have to stick with renting for now.

PasturesNew

Nenen wrote: »

I'm fed up with many of my colleagues telling me repeatedly that, 'house prices will drop in most of England but of course they won't in this area (Cambridge)!' If I try and ask (politely) why they think Cambridge will be exempt they mutter and mumble about what a desirable area it is

Cambridge slumped in the last crash.
Why should this one be any different.

e.g. I was looking at a terraced house on Newmarket Road with a friend right at the peak. Within 6 months the one next door (over twice the size) was up for sale at the same price.

e.g. I bought in 1990, sold in 1997 still 5% in negative equity.

There is no such thing as a safe place.

Other things in the last crash tended to be:
1] The smallest houses recovered last. People could afford to start out in a 2 or 3-bed house and not a studio/1-bed.
2] The grottier areas were slow to recover because people could aspire to the nicer areas.